**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**





**x**  **Quarterly
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**





For
      the
      quarterly period ended March 31, 2007





**OR**





**o**  **Transition
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934** ****




For
      the
      transition period from __________ to __________





**Commission
      File Number 001-14015**





**IONATRON,
      INC.**


(Exact
      Name of Registrant as Specified in Its Charter)





**Delaware**
            
            **77-0262908**(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (IRS
                Employer Identification Number)


**3716
                  East Columbia Street, Suite 120****Tucson,
                  Arizona**
              
              **85714**(Address
                  of Principal Executive
                  Offices)
              
              (Zip
                  Code)




**Registrant’s
                  telephone number, including area code**
              
              **(520)
                  628-7415**




Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, an accelerated filer, or a non-accelerated filer. See
      definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of
      the Exchange Act. (Check one):




Large
      Accelerated Filer o  Accelerated Filer x  Non-Accelerated Filer o





Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)


Yes
o
      No x





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      equity, as of the latest practicable date. As of May 7, 2007 there were
      78,968,119 shares of the issuer's common stock, par value $.001 per share,
      outstanding.









IONATRON,
      INC.


March
      31,
      2007


PART
                  I -
              
              FINANCIAL
                  INFORMATIONItem
                  1-
              
              Consolidated
                  Financial StatementsConsolidated
                  Balance Sheets as of March 31, 2007 (Unaudited) andDecember
                  31, 2006
              3Consolidated
                  Statements of Operations for the three months ended March 31, 2007
                  and
                  2006 (Unaudited)
              4Consolidated
                  Statements of Cash Flows for the three months ended March 31, 2007
                  and
                  2006 (Unaudited)
              5Notes
                to Consolidated Financial Statements
              6Item
                  2-
              
              Management's
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              11Item
                  4-
              
              Controls
                  and Procedures
              14PART
                  II -
              
              OTHER
                  INFORMATIONItem
                  1-
              
              Legal
                  Proceedings
              15Item
                  6-
              
              Exhibits
              16SIGNATURES
              17


-2-


**PART
      I FINANCIAL INFORMATION**


**ITEM
      1. CONSOLIDATED FINANCIAL STATEMENTS**




IONATRON,
        INC. CONSOLIDATED
          BALANCE SHEETS
  **March
                  31, 2007**
              
              **December
                  31, 2006****(Unaudited)**
              
              **(Audited)**ASSETSCurrent
                  assetsCash
                  and cash equivalents
              
              $
              18,971,812
              
              $
              22,123,792Accounts
                  receivable - net
              
              
              2,509,169
              
              
              1,258,363Inventory
              
              
              2,948,727
              
              
              2,214,471Securities
                  available-for-sale
              
              
              8,500,000
              
              
              8,500,000Prepaid
                  expenses and deposits
              
              
              476,367
              
              
              639,728Other
                  receivables
              
              
              1,279
              
              
              2,918Total
                  current assets
              
              
              33,407,354
              
              
              34,739,272Property
                  and equipment - net
              
              
              1,966,240
              
              
              2,205,278Other
                  assets
              
              
              72,776
              
              
              72,776Intangible
                  assets - net
              
              
              123,000
              
              
              135,300TOTAL
                  ASSETS
              
              $
              35,569,370
              
              $
              37,152,626LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCurrent
                  liabilitiesAccounts
                  payable - net
              
              $
              794,992
              
              $
              570,572Accrued
                  expenses
              
              
              277,386
              
              
              638,925Accrued
                  compensation
              
              
              692,358
              
              
              818,779Customer
                  deposits
              
              
              255,127
              
              
              284,279Current
                  portion of capital lease obligations
              
              
              23,080
              
              
              46,974Total
                  current liabilities
              
              
              2,042,943
              
              
              2,359,529Capital
                  lease obligations
              
              
              10,438
              
              
              30,536Deferred
                  rent
              
              
              121,074
              
              
              112,641Total
                  liabilities
              
              
              2,174,455
              
              
              2,502,706Commitments
                  and contingenciesStockholders’
                  equitySeries
                  A Convertible Preferred stock, $.001 par value, 2,000,000 sharesauthorized
                  and 690,000 shares issued and outstanding at March 31, 2007and
                  December 31, 2006.
              
              
              690
              
              
              690Common
                  stock, $.001 par value, 100,000,000 shares authorized; 78,225,936shares
                  issued and outstanding at March 31, 2007 and 78,171,267
                  sharesissued
                  and outstanding at December 31, 2006
              
              
              78,226
              
              
              78,171Additional
                  paid-in capital
              
              
              61,886,666
              
              
              60,488,633Accumulated
                  deficit
              
              
              (28,570,667
              )
              
              (25,917,574
              )Total
                  stockholders’ equity
              
              
              33,394,915
              
              
              34,649,920TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY
              
              $
              35,569,370
              
              $
              37,152,626


See
        accompanying notes to consolidated financial statements (unaudited)


-3-


IONATRON,
        INC.
 CONSOLIDATED
        STATEMENTS OF OPERATIONS


(Unaudited)
  **For
                  the three months ended**
                **March
                  31,****2007**
              
              **2006**Revenue
              
              $
              2,070,610
              
              $
              5,074,827Cost
                  of revenue
              
              
              2,337,994
              
              
              4,767,178Gross
                  profit (loss)
              
              
              (267,384
              )
              
              307,649Operating
                  expenses:General
                  and administrative
              
              
              2,219,622
              
              
              2,621,496Selling
                  and marketing
              
              
              129,800
              
              
              148,958Research
                  and development
              
              
              124,023
              
              
              1,075,066Total
                  operating expenses
              
              
              2,473,445
              
              
              3,845,520Operating
                  loss
              
              
              (2,740,829
              )
              
              (3,537,871
              )Other
                  (expense) incomeInterest
                  expense
              
              
              (999
              )
              
              (5,243
              )Interest
                  income
              
              
              383,826
              
              
              112,120Other
              
              
              12
              
              
              9Total
                  other
              
              
              382,839
              
              
              106,886Loss
                  before provision for income taxes
              
              
              (2,357,990
              )
              
              (3,430,985
              )Provision
                  for income taxes
              
              
              -
              
              
              11,299Net
                  loss
              
              
              (2,357,990
              )
              
              (3,442,284
              )Preferred
                  stock dividends
              
              
              (295,119
              )
              
              (303,660
              )Net
                  loss attributable to common stockholders
              
              $
              (2,653,109
              )
              $
              (3,745,944
              )Net
                  loss per common share – basic and diluted
              
              $
              (0.03
              )
              $
              (0.05
              )Weighted
                  average number of shares outstanding, basic and diluted
              
              
              78,171,872
              
              
              72,174,683
  See
        accompanying notes to consolidated financial statements
        (unaudited)





-4-


IONATRON,
        INC. CONSOLIDATED
          STATEMENTS OF CASH FLOWS (Unaudited)
  **For
                  the three months ended**
                **March
                  31,****2007**
              
              **2006**CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (2,357,990
              )
              $
              (3,442,284
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
                  and amortization
              
              
              271,235
              
              
              213,167Loss
                  (gain) on equipment disposal
              
              
              3,047
              
              
              (25,041
              )Deferred
                  income tax provision
              
              
              -
              
              
              10,200Provision
                  for doubtful accounts
              
              
              -
              
              
              59,088Provision
                  for losses on projects
              
              
              248,000
              
              
              139,996Non-cash
                  stock based compensation expense
              
              
              1,102,985
              
              
              1,127,675Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              (1,250,806
              )
              
              (865,259
              )Other
                  receivable
              
              
              1,639
              
              
              600Inventory
              
              
              (982,256
              )
              
              (1,550,306
              )Prepaid
                  expenses and deposits
              
              
              163,361
              
              
              (245,738
              )Accounts
                  payable
              
              
              224,420
              
              
              717,939Billings
                  in excess of costs
              
              
              -
              
              
              (25,724
              )Accrued
                  expenses, deposits and deferred rent
              
              
              (508,679
              )
              
              685,115Net
                  cash used in operating activities
              
              
              (3,085,044
              )
              
              (3,200,572
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchase
                  of equipment
              
              
              (38,224
              )
              
              (336,907
              )Proceeds
                  from sale of available-for-sale marketable securities
              
              
              -
              
              
              3,500,000Purchases
                  of available-for-sale marketable securities
              
              
              -
              
              
              (500,000
              )Proceeds
                  from disposal of equipment
              
              
              15,280
              
              
              -Net
                  cash (used in) provided by investing activities
              
              
              (22,944
              )
              
              2,663,093CASH
                  FLOWS FROM FINANCING ACTIVITIES:Principal
                  payments on capital lease obligations
              
              
              (43,992
              )
              
              (9,148
              )Exercise
                  of stock options and warrants
              
              
              -
              
              
              1,987,946Net
                  cash (used in) provided by financing activities
              
              
              (43,992
              )
              
              1,978,798Net
                  increase (decrease) in cash and cash equivalents
              
              
              (3,151,980
              )
              
              1,441,319Cash
                  and cash equivalents, beginning of period
              
              
              22,123,792
              
              
              371,248Cash
                  and cash equivalents, end of period
              
              $
              18,971,812
              
              $
              1,812,567


See
        accompanying notes to consolidated financial statements
        (unaudited)


-5-





**1.** **NATURE
      OF OPERATIONS AND BASIS OF PRESENTATION**





**NATURE
      OF BUSINESS AND SUMMARY OF OPERATIONS:**





Ionatron
      was formed to develop and market Directed Energy Weapon products and other
      products incorporating its proprietary Laser Induced Plasma Channel ("LIPC")
      and
      related technologies. Our goal is to deliver products that incorporate our
      technology for sale to Government customers for specific applications and
      platforms as well as products for other commercial customers. Ionatron has
      entered into several contracts with the Government for products and services
      as
      well as Cooperative Research and Development Agreements for joint research
      on
      LIPC-based Directed Energy Weapons and Counter-Weapon Systems. We expect to
      offer Government approved versions of our products for other Government and
      non-Government security applications in the future. Since our inception, we
      have
      engaged in research and development and business development activities. Our
      first Government contract was received in September of 2003. During 2004 we
      demonstrated the laser guided man-made lightning Directed Energy technology
      in
      the laboratory, demonstrated the technology effects on a variety of targets
      both
      under Government contract and using internal research and development funding,
      delivered a compact laser system specifically designed to enable the technology
      under a Government contract; and commenced a Government contract for the
      development of a system on a mobile platform for field demonstration and
      testing. In 2005, utilizing contract and internal research and development
      funds, we continued development of laser sources, advanced high voltage systems,
      and special-purpose optical systems, expanded target effects testing under
      Government contracts, and furthered our understanding of the underlying physics
      of our systems and products. From the company’s inception to date, we have
      focused upon, strengthened and developed key intellectual property in the areas
      of Directed Energy applications for our systems and methods. In 2005 and 2006,
      we entered into teaming agreements with other defense contractors regarding
      cooperative development and marketing of our LIPC and Laser Guided Energy (“LGE” tm )
      technologies and products.





In
      2005
      and 2006, in response to a heightened threat and at the request of a Government
      customer, we developed both major components and demonstrator systems that
      can
      counter Improvised Explosive Devices (“IEDs”) which constitute a major threat in
      several areas of war. During 2005, 2006, and continuing into early 2007 we
      completed a series of Government-sponsored tests of these counter-IED systems.
      Variations of our counter-IED products include a remotely operated vehicle,
      kits
      and palletized versions of this direct discharge counter-IED technology.
      Technical results of all testing are highly sensitive, but we believe the latest
      series of testing is consistent with previous tests and believe that these
      tests
      accurately reflect the capability of our technology in addressing this critical
      mission. We are actively working with the Marine Corps and other Government
      organizations to field this technology.





Our
      progress in developing our LGE technology has resulted in follow-on contracts,
      including recently announced sole-source development activities. In particular,
      the Department of Defense (“DoD”) has identified certain urgent counter-IED
      applications for directed energy which, we believe, will lead to the development
      and fielding of mission-specific LGE platforms in the foreseeable future.
      Current year contracted LGE development activities include vehicle stopping
      and
      counter Vehicle Borne IED (VBIED) missions, which we expect will lead to
      follow-on missions for the LGE platform. As these counter-IED initiatives
      continue to be advanced by our customer we will be seeking manufacturing
      opportunities to field the proximity-related direct discharge products, the
      laser-guided versions of these direct discharge products, as well as other
      related proprietary technologies.





**BASIS
      OF PRESENTATION**





The
      consolidated financial statements include the accounts of Ionatron and our
      wholly owned subsidiaries, Ionatron Technologies, Inc. and North Star as of
      March 31, 2007 (collectively, "Company," "Ionatron," "we," "our" and "us").
      All
      intercompany balances and transactions have been eliminated. In the opinion
      of
      management, all adjustments (which include normal recurring adjustments)
      necessary for a fair presentation of the results for the interim periods
      presented have been made. The results for the three-month period ended March
      31,
      2007, may not be indicative of the results for the entire year. The interim
      unaudited condensed consolidated financial statements should be read in
      conjunction with the Company's audited consolidated financial statements
      contained in our Annual Report on Form 10-K.





**USE
      OF ESTIMATES**





The
      preparation of consolidated financial statements in conformity with United
      States generally accepted accounting principles, which requires management
      to
      make estimates, judgments and assumptions that affect the amounts reported
      in
      the financial statements and accompanying notes. Management bases its
      assumptions on historical experiences and on various other assumptions that
      it
      believes to be reasonable under the circumstances, the results of which form
      the
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. In addition, Management
      considers the basis and methodology used in developing and selecting these
      estimates, the trends in and amounts of these estimates, specific matters
      affecting the amount of and changes in these estimates, and any other relevant
      matters related to these estimates, including significant issues concerning
      accounting principles and financial statement presentation. Such estimates
      and
      assumptions could change in the future as more information becomes known which
      could impact the amounts reported and disclosed herein. Significant estimates
      include revenue recognition under the percentage of completion method of
      contract accounting, the valuation of inventory and stock-based compensation
      expense.




-6-




**2.**  **ACCOUNTS
      RECEIVABLE**





Accounts
      receivable consist of the following as of March 31, 2007 and December 31,
      2006:


March
                  31, 2007
              
              December
                  31, 2006Contracts
                  in progress
              
              $
              560,633
              
              $
              224,080Completed
                  contracts
              
              
              569,908
              
              
              278,163Retained
              
              
              100,000
              
              
              100,000Cost
                  and estimated earnings on uncompleted contracts
              
              
              569,508
              
              
              44,116Pre-contract
                  costs on anticipated contracts
              
              
              709,120
              
              
              618,2812,509,169
              
              
              1,264,640Less:Allowance
                  for doubtful accounts
              
              
              -
              
              
              6,277Total
              
              $
              2,509,169
              
              $
              1,258,363





Contract
      receivables at March 31, 2007 and December 31, 2006 are expected to be collected
      within a year. There are no claims or unapproved change orders included in
      contract receivables presented. The retained balances represent a contract
      reserve for which a customer has been billed. We expect payment of this reserve
      pending the completion of a review by the customer of the project costs. The
      December 31, 2006 pre-contract costs on anticipated contracts are costs
      applicable to a contract that was probable of being awarded. In April 2007,
      we
      received a contract on material contained in pre-contract costs. The allowance
      for doubtful accounts represents an estimate for potentially uncollectible
      accounts receivable related to non-governmental customers which is based upon
      a
      review of the individual accounts outstanding and the Company’s prior history of
      uncollectible accounts receivable.


Costs
        and
        Estimated Earnings on Uncompleted Contracts


March
                  31, 2007
              
              December
                  31, 2006Cost
                  incurred on uncompleted contracts
              
              $
              1,459,217
              
              $
              127,622Estimated
                  earnings
              
              
              116,464
              
              
              28,902Total
                  billable costs and estimated earnings
              
              
              1,575,681
              
              
              156,524Less:Billings
                  to date
              
              
              1,006,173
              
              
              112,408Total
              
              $
              569,508
              
              $
              44,116Included
                  in accompanying balance sheet under the following
                  captions:Unbilled
                  costs and estimated earnings on uncompleted contracts included
                  in accounts
                  receivable$
              569,508
              
              $
              44,116Billings
                  in excess of costs and estimated earnings on uncompleted
                  contracts
              
              
              -
              
              
              -Total
              
              $
              569,508
              
              $
              44,116





-7-


**3.**  **INVENTORY**





Our
      inventories consist of the following as of March 31, 2007 and December 31,
      2006:


March
                  31, 2007
              
              December
                  31, 2006Raw
                  materials
              
              $
              1,595,159
              
              $
              1,484,005Raw
                  materials overhead
              
              
              109,109
              
              
              101,506Raw
                  materials reserve
              
              
              (217,280
              )
              
              (343,365
              )Total
                  raw materials
              
              
              1,486,988
              
              
              1,242,146Work-in-process
              
              
              2,773,049
              
              
              2,229,101Work-in-process
                  reserve
              
              
              (1,311,310
              )
              
              (1,256,776
              )Total
                  work-in-process
              
              
              1,461,739
              
              
              972,325Total
              
              $
              2,948,727
              
              $
              2,214,471





The
      March
      31, 2007 raw materials reserve of $217,280 and the work in process reserve
      of
      $1,311,310 were comprised of a reserve for loss on projects of $469,852, and
      a
      lower of cost or market reserve for $1,058,737. The December 31, 2006 raw
      materials reserve of $343,365 and the work in process reserve of $1,256,776
      were
      comprised of a reserve for loss on projects of $415,318 which has been charged
      to cost of revenue and a lower of cost or market reserve for $1,184,823 which
      has been charged to general and administrative expenses.





**4.**  **STOCK-BASED
      COMPENSATION**




Stock
      Options - Employees and Directors





Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of
      Statement of Financial Accounting Standards No. 123(R), “Share Based Payment”
(“SFAS No. 123(R)”), using the modified prospective transition method. Under
      that transition method, compensation cost recognized in the three months ended
      March 31, 2007 and 2006 includes: (a) compensation cost for all share-based
      payments granted prior to, but not yet vested as of January 1, 2006, based
      on
      the grant date fair value estimated in accordance with the original provisions
      of SFAS No. 123, and (b) compensation cost for all share-based payments granted
      subsequent to January 1, 2006, based on the grant date fair value estimated
      in
      accordance with the provisions of SFAS No. 123(R). The fair value for each
      option was estimated on the date of grant using the Black-Scholes option-pricing
      model. There were no stock options exercised during the three months ended
      March
      31, 2007





The
      following table summarizes the stock options outstanding as of March 31, 2007
      as
      well as activity during the three months then ended:


**Shares**
              
              **Weighted
                    Average****Exercise
                  Price**Outstanding
                  at December 31, 2006
              
              
              5,562,473
              
              $
              6.10Granted
              
              
              287,500
              
              $
              4.25Exercised
              
              
              -Forfeited
              
              
              (267,750
              )
              $
              7.30Outstanding
                  at March 31, 2007
              
              
              5,582,223
              
              $
              5.95Exercisable
                  at March 31, 2007
              
              
              2,433,390
              
              $
              4.95




-8-




As
      of
      March 31, 2007, the weighted average remaining contractual life of options
      outstanding and options exercisable was 3.77 and 3.20 years, respectively.
      There
      was $6.2 million of total unrecognized compensation cost related to unvested
      stock option awards as of March 31, 2007. For both the three months ended March
      31, 2007 and 2006, stock-based compensation expense totaled $1.1 million. As
      of
      March 31, 2007, the aggregate intrinsic value of outstanding options was $3.1
      million for 1,824,875 outstanding options in-the-money, and the aggregate
      intrinsic value for exercisable options was $2.7 million for of 1,329,542
      exercisable options in-the-money (the intrinsic value of a stock option is
      the
      amount by which the market value of a share of the Company’s common stock
      exceeds the exercise price of the option).





Stock
      Options and Warrants - Non Employees





At
      March
      31, 2007 and 2006 there were outstanding warrants to purchase 1.6 million and
      589,827 shares of common stock, respectively which were issued in connection
      with the August 2006 financing or were outstanding at the date of the merger.





Compensation
      expense recorded for 100,000 option shares issued to a non-employee for the
      three months ended March 31, 2007 and 2006 was approximately $28,000 for each
      period, which was charged to operating expenses with an offsetting entry to
      pre-paid assets.





**5.**  **INCOME
      TAXES**





We
      adopted the provisions of Financial Standards Accounting Board Interpretation
      No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation
      of FASB Statement No. 109 (“SFAS 109”) on January 1, 2007. As a result of the
      implementation of FIN 48, we recognized no material adjustment in the liability
      for unrecognized income tax benefits. At the adoption date of January 1, 2007
      and at March 31, 2007, we had no unrecognized tax benefits.





We
      recognize interest and penalties related to uncertain tax positions in income
      tax expense. As of March 31, 2007, we had no uncertain tax positions and no
      related accrued interest and penalties.





For
      the
      three months ended March 31, 2006, we recorded a provision for income taxes
      of
      approximately $11,000 due to an increase in deferred tax liabilities as a result
      of the tax amortization of our goodwill. We did not record a provision for
      taxes
      in the first quarter of 2007 because in the fourth quarter of 2006, we reduced
      the fair value of goodwill to zero.





**6.**  **SIGNIFICANT
      CUSTOMERS**





The
      substantial majority of our customers is either the U.S. Government or
      contractors to the U.S. Government and represents approximately 98% and 98%
      of
      revenues for the three months ended March 31, 2007 and 2006,
      respectively.





**7.**  **NET
      LOSS PER SHARE**





Basic
      loss per share is computed as net loss attributable to common stockholders
      divided by the weighted average number of common shares outstanding for the
      period. Diluted loss per share reflects the potential dilution that could occur
      from common shares issuable through exercise of stock options and warrants
      and
      common shares issuable upon the conversion of convertible instruments. The
      dilutive effect of options and warrants and our Series A Convertible Preferred
      Stock, which were not included in the total of diluted shares because the effect
      was antidilutive, was 1,148,653 and 1,860,528 shares for the three months ended
      March 31, 2007 and 2006, respectively, computed using the treasury stock
      method.





**8.** **COMMITMENTS
          AND CONTINGENCIES**





**LITIGATION**





In
      July
      2006, two class action complaints were filed by George Wood and Raymond Deedon
      against Ionatron and its founders. Each of the class actions was filed in the
      United States District Court for the District of Arizona and allege, among
      other
      things, violations of Section 10(b) of the Securities Exchange Act of 1934
      and
      Rule 10b-5, claiming that the Company issued false and misleading statements
      concerning the development of its counter-IED product. The court consolidated
      these cases, and a consolidated amended complaint was served. On February 16,
      2007, the Company and the individual defendants filed a motion to dismiss the
      consolidated amended complaint for failure to state a cause of action. On March
      30, 2007, the plaintiffs filed papers in opposition to the Company’s motion to
      dismiss. We are unable to evaluate the likelihood of an unfavorable outcome
      in
      this matter or estimate the range of potential loss, if any. However, the
      Company intends to defend itself vigorously in any legal
      proceedings.




-9-




In
      September 2006, a derivative action was filed by John T. Johnasen in Arizona
      State Court, Pima County, against certain of the Company’s officers and
      directors, alleging, among other things, breach of fiduciary duty. The court
      has
      stayed the derivative action until June 29, 2007 and has directed the parties
      to
      give notice when the federal district court rules on the Company’s motion to
      dismiss the consolidated complaint in the class action described above, and
      to
      seek leave of the court if they wish to extend the stay.




In
      addition, we may from time to time be involved in legal proceedings arising
      from
      the normal course of business. As of the date of this report, we have not
      received notice of any other legal proceedings.





**9.** **INDUSTRY
          SEGMENTS**





In
      January 2007, we consolidated the North Star operations into Ionatron’s to more
      effectively utilize the shared workforce of the two operations. As a result
      of
      this consolidation, for 2007 we have also collapsed the reporting segments
      of
      Ionatron and North Star into one segment for financial reporting purposes since
      North Star no longer meets the definition of a segment under SFAS 131,
“Disclosures about Segments of an Enterprise and Related
      Information”.




-10-




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





Our
      discussion and analysis of the financial condition and results of operations
      should be read in conjunction with the unaudited consolidated financial
      statements and the related disclosures included elsewhere herein and in
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations included as part of our Annual Report on Form 10-K for the year
      ended
      December 31, 2006.





**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





Certain
      statements in this Quarterly Report on Form 10-Q constitute forward-looking
      statements within the meaning of the securities laws. Forward-looking statements
      include all statements that do not relate solely to the historical or current
      facts, and can be identified by the use of forward looking words such as "may",
      "believe", "will", "expect", "expected", "project", "anticipate", "anticipated
      estimates", "plans", "strategy", "target", "prospects" or "continue". These
      forward looking statements are based on the current plans and expectations
      of
      our management and are subject to a number of uncertainties and risks that
      could
      significantly affect our current plans and expectations, as well as future
      results of operations and financial condition and may cause our actual results,
      performances or achievements to be materially different from any future results,
      performances or achievements expressed or implied by such forward-looking
      statements. Important factors that could cause our actual results to differ
      materially from our expectations are described Item 1A. (Risk Factors) of our
      Annual Report on Form 10-K for the year ended December 31, 2006. In making
      these
      forward-looking statements, we claim the protection of the safe-harbor for
      forward-looking statements contained in the Private Securities Reform Act of
      1995. Although we believe that the expectations reflected in such
      forward-looking statements are reasonable, there can be no assurance that such
      expectations will prove to have been correct. We do not assume any obligation
      to
      update these forward-looking statements to reflect actual results, changes
      in
      assumptions, or changes in other factors affecting such forward-looking
      statements.





**OVERVIEW**





Ionatron
      was formed to develop and market Directed Energy Weapon products and other
      products incorporating its proprietary Laser Induced Plasma Channel ("LIPC")
      and
      related technologies. Our goal is to deliver products that incorporate our
      proprietary technologies for sale to Government customers for specific
      applications and platforms as well as products for other commercial customers.
      Ionatron has entered into several contracts with the Government for products
      and
      services as well as Cooperative Research and Development Agreements for joint
      research on LIPC-based Directed Energy Weapons and Counter-Weapon Systems.
      We
      expect to offer Government approved versions of our products for other
      Government and non-Government security applications in the future. Since our
      inception, we have engaged in research and development and business development
      activities. Our first Government contract was received in September of 2003.
      During 2004 we demonstrated the laser guided man-made lightning Directed Energy
      technology in the laboratory, demonstrated the technology effects on a variety
      of targets both under Government contract and using internal research and
      development funding, delivered a compact laser system specifically designed
      to
      enable the technology under a Government contract; and commenced a Government
      contract for the development of a system on a mobile platform for field
      demonstration and testing. In 2005, utilizing contract and internal research
      and
      development funds, we continued development of laser sources, advanced high
      voltage systems, and special-purpose optical systems, expanded target effects
      testing under Government contracts, and furthered our understanding of the
      underlying physics of our systems and products. From the company’s inception to
      date, we have focused upon, strengthened and developed key intellectual property
      in the areas of Directed Energy applications for our systems and methods. In
      2005 and 2006, we entered into teaming agreements with other defense contractors
      regarding cooperative development and marketing of our LIPC and Laser Guided
      Energy (“LGE” tm )
      technologies and products.





Since
      our
      inception, we have pursued the development of a range of core intellectual
      property objectives using internal investment, and have aggressively pursued
      patents on such technology. The objective of this approach has been to establish
      a sole source role for us in customer-funded technology and product development
      contracts, as well as to establish barriers to competition. We understand that
      our patent applications, in tandem with our significant proprietary knowledge,
      can be used as justification for sole source contracts in accordance with
      Federal Acquisition Regulations, and thereby avoid the necessity of competitive
      solicitations. Presently we have four patents issued and 28 patent applications
      in-process. Of the 28 pending patent applications, we have received secrecy
      orders on 15 and expect to receive secrecy orders on an additional two. The
      U.S.
      patent office imposes secrecy orders when disclosure of an invention by
      publication of a patent would be detrimental to the National Security. These
      patents are treated as under review unless and until they are declassified,
      at
      which time patents may be issued, with enforcement based on the original filing
      date. However, two of these secrecy order patent applications have been found
      patentable by the patent office. These patents and patent applications relate
      to
      our core LIPC technology, counter-IED offerings, and other technologies related
      to LGE, laser and high voltage applications.





In
      2005
      and 2006, in response to a heightened threat and at the request of a Government
      customer, we developed both major components and demonstrator systems that
      can
      counter Improvised Explosive Devices (“IEDs”) which constitute a major threat in
      several areas of war. During 2005 and 2006 and continuing into early 2007 we
      completed a series of Government-sponsored tests of these counter-IED systems.
      Variations of our counter-IED products include a remotely operated vehicle,
      kits
      and palletized versions of this direct discharge counter-IED technology.
      Technical results of all testing are highly sensitive, but we believe the latest
      series of testing is consistent with previous tests and we are fully satisfied
      that these tests accurately reflect the capability of our technology in
      addressing this critical mission. We are actively working with the Marine Corps
      and other Government organizations to field this technology. We are fully
      satisfied with the technical results of these tests.




-11-




Our
      progress in development of our LGE technology has resulted in follow-on
      contracts, including recently announced sole-source development activities.
      In
      particular, the Department of Defense (“DoD”) has identified certain urgent
      counter-IED applications for directed energy which, we believe, will lead to
      the
      development and fielding of mission-specific LGE platforms in the foreseeable
      future. Current year contracted LGE development activities include vehicle
      stopping and counter Vehicle Borne IED (VBIED) missions, which we expect will
      lead to follow-on missions for the LGE platform. As these counter-IED
      initiatives continue to be advanced by our customer we will be seeking
      manufacturing opportunities to field the proximity-related direct discharge
      products, the laser-guided versions of these direct discharge products, as
      well
      as other related proprietary technologies.





Government
      support for our LGE and LIPC technologies continues through Congressional
      funding in to the U.S. Navy budget, as well as funding that is transferred
      to
      the Navy from other services. Ionatron was awarded a $9.8 million dollar
      contract by the U.S. Navy that was funded by Congress as part of the fiscal
      year
      2006 DoD appropriations. The delay in awarding this contract involved
      transferring Government property from the previous Government organization
      that
      funded the initial Transportable Demonstrator project, and the contract could
      not be awarded until this material transfer was complete. This contract also
      contains a portion of the additional approximately $5.1 million in Government
      funding that was identified in the fiscal year 2006 DoD Appropriations Bill
      to
      implement a new program that is designed to involve several organizations within
      the DoD in developing a new application for the core LGE and LIPC technologies.





In
      March
      2007, the U.S. Army issued a Request-for-Information regarding Laser Guided
      Energy capabilities. This request was part of the customer process to validate
      that Ionatron has a unique capability so that a sole source contract may be
      awarded. It is anticipated that this funding will occur within the next few
      months and will be approximately $1.0 million. Previously, the U.S. Army has
      provided funding through existing U.S. Navy contracts. The Army has a dedicated
      RDT&E (Research Development Testing and Evaluation) funding line for LIPC
      technology and is now instituting their own contract vehicle to support this
      budgeted program in future years.





The
      fiscal year 2007 Defense Authorization bill contained approximately $400,000
      of
      funding for testing of the counter-IED system technology by the U.S. Marine
      Corp. This testing occurred during late January and February 2007. We have
      been
      informed that the Marine Corp. has forwarded this report to Congress and has
      initiated a request for funding for further development of the counter-IED
      technology. Initial funding has been identified and approved and, although
      there
      can be no assurance that a contract will be awarded, a contract to continue
      technology development and implementation is expected shortly.





During
      the third quarter of 2006, we received a Small Business Technology Transfer
      Research Contract from the Army Research Office. This effort involves using
      unique aspects of the ultra-short pulse laser technology for remote sensing
      applications. We are teamed with the University of Arizona in this effort.
      The
      first phase of the program was completed successfully and in response to a
      request by the Army Research Office, we submitted, an initial Phase II proposal.
      The Phase II effort is expected to involve development of a prototype system.
      The Army’s schedule for awarding of the Phase II effort is in September 2007,
      although there can be no assurance that a contract will be awarded, on a timely
      basis, or at all, or the magnitude of such contract.





In
      April
      2007, we signed an Exclusive Supplier Agreement with a major defense contractor
      regarding a non-military application for high voltage electrical systems. This
      agreement identifies Ionatron as the preferred supplier for the proprietary
      technology being developed. The agreement provides for a close working
      relationship between the organizations in developing the technology, and grants
      us a license to use the technology, and specific subsystems developed for that
      technology, for applications that do not compete with the major contractor’s own
      technology initiative.





-12-


**RESULTS
      OF OPERATIONS**





**COMPARISON
      OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 IS AS
      FOLLOWS:**


2007
              
              2006Revenue
              
              $
              2,070,610
              
              $
              5,074,827Cost
                  of revenue
              
              
              2,337,994
              
              
              4,767,178General
                  and administrative
              
              
              2,219,622
              
              
              2,621,496Selling
                  and marketing
              
              
              129,800
              
              
              148,958Research
                  and development
              
              
              124,023
              
              
              1,075,066Other
                  (expense) income:Interest
                  expense
              
              
              (999
              )
              
              (5,243
              )Interest
                  income
              
              
              383,826
              
              
              112,120Other
              
              
              12
              
              
              9Loss
                  before provision for income taxes
              
              
              (2,357,990
              )
              
              (3,430,985
              )Provision
                  for income taxes
              
              
              -
              
              
              11,299Net
                  loss
              
              $
              (2,357,990
              )
              $
              (3,442,284
              )





**REVENUE**





The
      decrease of approximately $3.0 million in revenue for the three months ended
      March 31, 2007 compared to 2006 is primarily attributable to the completion
      in
      2006 of our 12-unit counter IED (“Improvised Explosive Device”) order, while
      revenue from our LIPC project increased a modest amount.





**COST
      OF REVENUE**





Cost
      of
      revenue decreased approximately $2.4 million when compared to the three months
      ended March 31, 2006 due to decreased revenue. Cost of revenue includes an
      allocation of general and administrative expenses and research and development
      costs in accordance with the terms of our contracts. Primarily as a result
      of
      lower revenue, the amount of allowable general and administrative expenses
      allocated to our revenue projects also decreased. The negative gross margin
      in
      the first quarter of 2007 was primarily due to costs attributed to
      non-government based contracts.





**GENERAL
      AND ADMINISTRATIVE**





Reported
      general and administrative (“G&A”) expense decreased approximately $402,000
      in the first quarter 2007 when compared to the first quarter 2006. G&A
      expenses incurred in the first quarter of 2007 compared to the first quarter
      2006 actually decreased by approximately $1.8 million. However, fewer G&A
      expenses were included in the indirect overhead costs allocated to material
      included in the costs of revenue on government contracts during the first
      quarter 2006 effectively reducing by $1.4 million the reported difference to
      $402,000 when compared to first quarter 2007. The difference in expenses
      incurred include the reduction in professional fees of $449,000, provision
      for
      bad debts and other losses on non-government based contracts of $422,000,
      supplies of $277,000, travel of $218,000, temporary help and consultants of
      $170,000, and fringe and benefits cost of $154,000.





**SELLING
      AND MARKETING**





Selling
      and marketing expenses of approximately $130,000 for the quarter ended March
      31,
      2007 are a decrease of approximately $19,000 from the $149,000 recognized in
      the
      quarter ended March 31, 2006, which is reflective of decreased marketing
      materials.





**RESEARCH
      AND DEVELOPMENT**





Research
      and development (“R&D”) expenses decreased approximately $951,000 during the
      three months ended March 31, 2007 as compared to 2006 primarily due to the
      approximately $623,000 reduction of allocated labor and overhead on R&D
      projects. In the first quarter of 2007, we were focused more on in-process
      projects rather than internally funded R&D.




-13-




**INTEREST
      INCOME AND INTEREST EXPENSE**





Net
      interest income in the first quarter of 2007 increased approximately $276,000
      from the same period of 2006 primarily as a result of additional funds being
      provided by the August 2006 financing invested in money market accounts.





**NET
      LOSS**





Our
      operations for the three months ended March 31, 2007 resulted in a net loss
      of
      approximately $2.4 million, a decrease in our period loss of approximately
      $1.1
      million when compared to the same period in 2006. This decrease is reflective
      of
      reductions in R&D of approximately $951,000, general and administrative of
      $402,000 and an increase of our interest income of $272,000, offset by negative
      gross margins attributed to non-government based contracts.





**LIQUIDITY
      AND CAPITAL RESOURCES**





Our
      cash
      position decreased during the first three months of 2007 by approximately $3.2
      million primarily as a result of $3.1 million used in operating activities.
      At
      March 31, 2007, we had approximately $27.5 million of cash, cash equivalents
      and
      securities available-for-sale.





During
      the first three months of 2007, we used approximately $3.1 million of cash
      in
      operating activities. This amount is comprised primarily of our net loss of
      approximately $2.4 million and increases in accounts receivable of $1.3 million,
      inventory of $982,000 and a decrease of accrued expenses, deposits and deferred
      rent of $509,000 reduced by non-cash stock option compensation expense of
      approximately $1.1 million, depreciation and amortization expense of $271,000,
      provision for loss on projects of $248,000 and a reduction of accounts payable
      of $224,000. In the first quarter of 2007, investment activities used
      approximately $23,000 from the acquisition and disposal of equipment while
      financing activities used approximately $44,000 from the early settlement of
      two
      capital lease obligations.





In
      the
      course of normal business operations and support for future revenue activities,
      we customarily incur approximately $500,000 of future purchase commitments
      which
      typically settle within 12 months of incurrence.





We
      anticipate that short-term and long-term funding needs will be provided from
      cash and cash equivalents and available-for-sale marketable securities and
      cash
      flow from government contracts. We believe that we have sufficient working
      capital to fulfill existing contracts and expected contracts in 2007 and into
      2008. The transportable demonstrator contract and at least two of the other
      Ionatron contracts, that presently represent a major portion of our current
      activity, are on a cost plus fixed fee basis. This means all work performed
      is
      done at our Government-approved rates, which include general and administrative
      costs, overhead, labor and materials, fees and profit. These costs are accrued
      as incurred and billed monthly. Other contracts are at fixed prices which have
      commercial type gross margins associated with them.





**BACK-LOG
      OF ORDERS**




At
      March
      31, 2007, we had a backlog (that is, work load remaining on signed contracts)
      of
      approximately $2.6 million to be completed within the next twelve months. The
      backlog does not include proposals and contracts under negotiation.





**ITEM
      4. CONTROLS AND PROCEDURES**





**EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES**





Our
      management, with the participation of our Chief Executive Officer and Chief
      Financial Officer, evaluated the effectiveness of our disclosure controls and
      procedures as of March 31, 2007. Based on that evaluation, our Chief Executive
      Officer and Chief Financial Officer have concluded that our disclosure controls
      and procedures are effective to ensure that information required to be disclosed
      by us in reports that we file or submit under the Securities Exchange Act of
      1934 is recorded, processed, summarized and reported within the time periods
      specified in Securities and Exchange Commission rules and forms. During the
      quarter ended March 31, 2007, there was no significant change in our internal
      controls over financial reporting that has materially affected, or which is
      reasonably likely to materially affect our internal controls over financial
      reporting.





-14-


**PART
      II - OTHER INFORMATION**





**ITEM
      1**  **LEGAL
      PROCEEDINGS**





In
      July
      2006, two class action complaints were filed by George Wood and Raymond Deedon
      against Ionatron and its founders. Each of the class actions was filed in the
      United States District Court for the District of Arizona and allege, among
      other
      things, violations of Section 10(b) of the Securities Exchange Act of 1934
      and
      Rule 10b-5, claiming that the Company issued false and misleading statements
      concerning the development of its counter-IED product. The court consolidated
      these cases, and a consolidated amended complaint was served. On February 16,
      2007, the Company and the individual defendants filed a motion to dismiss the
      consolidated amended complaint for failure to state a cause of action. On March
      30, 2007, the plaintiffs filed papers in opposition to the Company’s motion to
      dismiss. We are unable to evaluate the likelihood of an unfavorable outcome
      in
      this matter or estimate the range of potential loss, if any. However, the
      Company intends to defend itself vigorously in any legal
      proceedings.




In
      September 2006, a derivative action was filed by John T. Johnasen in Arizona
      State Court, Pima County, against certain of the Company’s officers and
      directors, alleging, among other things, breach of fiduciary duty. The court
      has
      stayed the derivative action until June 29, 2007 and has directed the parties
      to
      give notice when the federal district court rules on the Company’s motion to
      dismiss the consolidated complaint in the class action described above, and
      to
      seek leave of the court if they wish to extend the stay.




In
      addition, we may from time to time be involved in legal proceedings arising
      from
      the normal course of business. As of the date of this report, we have not
      received notice of any other legal proceedings.





-15-


**ITEM
      6**  **EXHIBITS**





EXHIBIT
                NUMBER
            
            DESCRIPTION31.1
            
            Certification
                of Chief Executive pursuant to Rule 13a-14 or 15d-14 of the Securities
                Exchange Act of 1934, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14 or 15d-14 of the
                Securities Exchange Act of 1934, as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Chief
                Executive Officer Certification pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Chief
                Financial Officer Certification pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




-16-





**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.


**IONATRON,
              INC.****By**
            **/s/** **Dana
              A, Marshall**Dana
                A. Marshall
              Chief
                Executive Officer and President




Date:
      May
      10, 2007





-17-